It recommended an immediate investment in long-term early intervention programs to prevent children from harm and a dramatic overhaul of the Department of Family and Community Services, described as a "ship that's already sunk".

Of the $1.9 billion annual child protection budget, only 17 per cent is spent on early intervention, with the remainder spent on out-home-care and statutory child protection.

"That's a funding mix that guarantees generations of lost children," said Greens MP David Shoebridge, who sat on the committee overseeing the inquiry.

Committee chairman Greg Donnelly MLC said the findings left him filled with "sadness and anger".

"How bad does it have to get before we, as a society say, something is very wrong when so many children are in harm's way," he said.

"The Department of Family and Community Services, for all the work they do, for the budget they have, as some people have said, is a ship that's already sunk in terms of its ability to deal with the issues that are before us."

Almost 200,000 reports relating to 278,521 children were made to FaCS child protection helpline in 2015-16. Only 30 per cent of children assessed as being at risk of significant harm received a face-to-face visit from a caseworker. There are about 20,000 children in out-of-home care, a figure which has almost doubled over the past decade despite multiple inquiries and reforms to the system.

"The current system is failing vulnerable children and families," the report found. "It is overwhelmed and ... apparently incapable of adequately addressing the systemic issues that review after review have identified over the last decade."

Mr Donnelly said the response to the crisis needed to transcend politics, with the report finding all parties must co-operate to implement its recommendations which include a stronger focus on evidence-based early intervention, more support for children in out-of-home care, better oversight of non-government child welfare agencies and an overhaul of FaCS to improve productivity while supporting staff.

Family and Community Services Minister Pru Goward said reform which addressed many of the recommendations was already underway.

"We need to continuously improve the child protection system and how we deal with some of the most vulnerable people in our society and I welcome any recommendations which focus on improving the lives of our most vulnerable," she said.

Shadow family and community services minister Tania Mihailuk said the report "has acknowledged the impact of some of the recent key failings of the child protection system in our state and the NSW opposition will proactively work with the government to ensure all the recommendations are implemented."